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FMC Chair Seeks Bigger Budget Amid Increased Shipper Complaints, Legal Actions

More complaints, lawsuits and investigations into possible legal violations led Federal Maritime Commission (FMC) chair Daniel Maffei to ask Congress for a bigger budget.

Maffei testified before a House Committee on Transportation and Infrastructure subcommittee Wednesday to request a budget of $34.7 million for the 2023 fiscal year, an increase of 5.2 percent from the prior year.

“Demand for Commission services is not dissipating,” Maffei said in his testimony. “Our Office of Consumer Affairs and Dispute Resolution Services continues to receive voluminous requests from the public for assistance.”

Maffei went on to describe a situation fraught with “aggravated shippers” continuing to file service complaints and more legal activities against carriers as FMC staff in the Bureau of Enforcement and at the regional levels look into leads.

“Not only is the demand for Commission services not dissipating, the reasons why people contact us do not appear to be going away anytime soon,” Maffei said.

The additional funding would expand the FMC’s payroll to 150, with the majority of the new hires directed toward enforcement and complaint services. Complaints over a wide range of carrier practices have become increasingly common.

Of the more recent actions, an FMC administrative law judge found Hapag-Lloyd to be in violation of the Shipping Act on 14 counts and ordered the ocean carrier to pay Golden State Logistics $822,220. The judgement centered around detention fees that were found to be unlawfully assessed on 11 empty containers. Hapag-Lloyd told Sourcing Journal earlier this week it is looking into the ruling.

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Supply chain issues, ranging from congestion to capacity constraints amid increased consumer demand and higher transportation costs, have stretched the country’s goods movement system and also driven up the number of service complaints.

Lawmakers have since stepped in, with the House passage of the Ocean Shipping Reform Act (OSRA) late last year that was followed by the Senate’s passage of its own version of the bill earlier this month. OSRA would mark the first major overhaul to the shipping Act in nearly two decades and would also arm the FMC with greater oversight power.

Still, Maffei outlined a number of steps the FMC has already taken to ramp its enforcement measures, particularly around the ocean carriers and fees being charged to shippers. The commissions has also increased its monitoring of carriers, and more specifically the alliances struck among multiple companies, Maffei reported in his testimony.

The FMC chair went on to reiterate his commitment to helping U.S. exporters obtain ocean services, which has been a point of contention in recent years as shippers have claimed carriers were bypassing stateside exporters in favor of offering service to overseas importers. Eleven shipping lines’ export services are currently being studied by the FMC in response to those concerns.

“The global, ocean-linked supply chain system continues to suffer from conditions that undermine its effectiveness and provide no obvious or easy solutions,” Maffei said. “Congestion, diminished reliability and shipper competition for scarce resources, in this case aboard vessels, all work in tandem to force rates up. The longer demand remains at historic levels, the longer it will take for the system to return to some semblance of its normal operating rhythm.”

Although shipper complaints around late fees and service have dominated headlines, Maffei pointed out the issue is far more complex than the relationship between carriers and shippers. It also encompasses availability of equipment, warehousing, train service, trucking and labor, he said.

“The U.S. domestic freight transportation system has been strained for years,” Maffei said. “It has operated sufficiently, but with essentially no excess capacity to absorb shocks to the system.”